Correlation Between Oak Ridge and Finward Bancorp

Can any of the company-specific risk be diversified away by investing in both Oak Ridge and Finward Bancorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Oak Ridge and Finward Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oak Ridge Financial and Finward Bancorp, you can compare the effects of market volatilities on Oak Ridge and Finward Bancorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Oak Ridge with a short position of Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and Finward Bancorp.

Diversification Opportunities for Oak Ridge and Finward Bancorp

-0.59

Correlation Coefficient

Oak Ridge  Finward Bancorp

Excellent diversification

The 3 months correlation between Oak and Finward is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and Oak Ridge is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Oak Ridge Financial are associated (or correlated) with Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Oak Ridge i.e., Oak Ridge and Finward Bancorp go up and down completely randomly.

Pair Corralation between Oak Ridge and Finward Bancorp

Given the investment horizon of 90 days Oak Ridge Financial is expected to generate 0.4 times more return on investment than Finward Bancorp. However, Oak Ridge Financial is 2.48 times less risky than Finward Bancorp. It trades about 0.14 of its potential returns per unit of risk. Finward Bancorp is currently generating about -0.09 per unit of risk. If you would invest  2,025  in Oak Ridge Financial on September 21, 2024 and sell it today you would earn a total of  35.00  from holding Oak Ridge Financial or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Oak Ridge Financial  vs.  Finward Bancorp

Oak Ridge Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Finward Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finward Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Finward Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Oak Ridge and Finward Bancorp

The main advantage of trading using opposite Oak Ridge and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge position performs unexpectedly, Finward Bancorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Finward Bancorp will offset losses from the drop in Finward Bancorp's long position.

The idea behind Oak Ridge Financial and Finward Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..